We discuss studies of foliar endophytic fungi (FEF) and arbuscular mycorrhizal fungi (AMF) associated with Theobroma cacao in Panama. Direct, experimentally controlled comparisons of endophyte free (E-) and endophyte containing (E+) plant tissues in T. cacao show that foliar endophytes ( FEF) that commonly occur in healthy host leaves enhance host defenses against foliar damage due to the pathogen ( Phytophthora palmivora). Similarly, root inoculations with commonly occurring AMF also reduce foliar damage due to the same pathogen. These results suggest that endophytic fungi can play a potentially important mutualistic role by augmenting host defensive responses against pathogens. There are two broad classes of potential mechanisms by which endophytes could contribute to host protection: (1) inducing or increasing the expression of intrinsic host defense mechanisms and (2) providing additional sources of defense, extrinsic to those of the host ( e. g., endophyte-based chemical antibiosis). The degree to which either of these mechanisms predominates holds distinct consequences for the evolutionary ecology of host-endophyte-pathogen relationships. More generally, the growing recognition that plants are composed of a mosaic of plant and fungal tissues holds a series of implications for the study of plant defense, physiology, and genetics.